May 05, 2010

Fetzer's Footwear: An Introduction

You overwhelmingly supported Gliebers Dresses, a story about a catalog brand struggling to remain relevant in the internet era.

So why don't you come along for another ride? This summer, we're going to talk about another business, an online/retail brand named "Fetzer's Footwear" (note ... this story, the characters, and the location where the story takes place are a work of fiction).

Fetzer's Footwear is led by Lauren Fetzer, the 39 year old daughter of outdoor enthusiast and entrepreneur Lou Fetzer, who founded Fetzers Footwear as a lone shoe store in downtown Seattle in 1980. By 1995, Mr. Fetzer grow the chain to seven stores across Pierce, King, and Snohomish Counties in Western Washington. His unexpected passing from Pancreatic Cancer in December 1995 could have left the brand in disarray. Fortunately for all, his will clearly stated that the brand was to be run by his lone daughter, Lauren.

Lauren never told anybody whether she wanted to run the business, or felt it was an obligation. She assumed the role of CEO in January 1996 and never looked back. Lauren was instrumental in making Fetzer's Footwear an early multichannel force. By 2005, online sales grew to $55,000,000, easily outpacing respectable retail sales of about $11,000,000. Fetzer's Footwear was a true online force to be reckoned with.

And then along came Zappos.

By late 2007, online sales had declined to $50,000,000. Zappos had clearly cannibalized the online business. Ms. Fetzer faced considerable pressure from the local press, who blasted her for an inability to compete with Nordstrom in retail and Zappos online.

It certainly didn't help that the economy blew up in late 2007. But Ms. Fetzer, with a BS Degree in Accounting from the University of Washington, never went into debt, and never grew the business faster than cash flow allowed. Her staff marvel at her ability to crunch numbers in a spreadsheet. Her staff were especially thankful Lauren was able to lead her team through the Great Recession without a single layoff or store closing. In fact, through 2009, Fetzer's Footwear actually observed sales growth in both the retail and online channels. Through April 2010, Fetzer's Footwear is a $12,000,000 retail and $52,000,000 online business that operates at an 8% pre-tax profit of about $5,000,000. Ms. Fetzer keeps 15% of profit for her annual salary, and plows the remaining 85% of profit back into the business. She has maintained this structure since taking the company over in 1996, the same structure her Father used.

The pundits are mystified by the fact that Ms. Fetzer can grow a business through the teeth of the economic downturn. We'll explore how she accomplishes consistent and outstanding performance throughout the series.

As mentioned earlier, Lauren Fetzer is thirty-nine years old. She never married. Her co-workers understand that she is "married to the business". Lauren is exceptionally bright, talented, articulate, and easy to get along with. She is an avid outdoor enthusiast, and actively wears her own merchandise. Some thought she went too far by moving the corporate headquarters to the tiny village of Coho Bay on Madrona Island (a rural island in the Salish Sea, northwest of Seattle) in 1999, but Lauren wanted her employees to "live the brand". Secretly, Lauren wanted to live in a place where she could watch the Orca whale pods swim by each day! Most employees live in Seattle, and commute via ferry to work each day.

Lauren Fetzer loves 90s music, she carries her iPod touch with her everywhere she goes, her earbuds and a beanie cap are her signature. You would be equally likely to see her wearing her earbuds in her office, while putting a crab pot in the ocean, or when enjoying an amber beer at Dale's Pub.

We will spend the next several months analyzing business issues associated with an online brand that is moving into mobile, social, and content generation, a brand that also has synergy issues with retail stores.